I often get asked by angry Ontario electricity consumers, What is one simple thing that the provincial government and my local utility could do today to start reducing the pace of rate increases?
My reply: Stop spending ratepayer and taxpayer dollars on conservation programs.
Ontario power consumers don’t need brochures, coupons, ads on TV, and train loads loads of high priced consultants and bureaucrats with fancy pensions to know to cut their use. Rising power rates are making people cut usage. Ontario’s power demand peaked in 2005 (on a weather adjusted basis) and has been falling steadily since.
Conservation programs are unnecessary fat.
The only examples of conservation programs that I can think of that shouldn’t be terminated immediately are programs to either fuel switch off electric heat in social housing or to weatherize better to cut usage.
The economic track record of conservation programs in Ontario needs to be thoroughly but independently investigated. Any such investigation will have to wade through vast swamps of studies and analysis produced by high priced help bent on self promotion.
The Environmental Commissioner’s opinion is that no amount of conservation spending is enough. The Environmental Commissioner Gord Miller’s conservation analysis is central to his advocacy for green poverty.
The Ontario Energy Board disgraces itself by ceaselessly repeating fraudulent government advertising about how conservation programs are good value for money. Meanwhile, Ontario consumers are paying vast sums to generators to not generate.
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“Meanwhile, Ontario consumers are paying vast sums to generators to not generate.”
That is the real underlying problem – far too much generation at prices well above the marginal cost of conservation.
BC Hydro recently came up with a plan to terminate some generation contracts that had not yet reached commercial operation date, and not to renew others at costs well above conservation. Conservation “programs” are only a small part of most utilities conservation activities, with the bulk of the savings coming from codes and standards, and conservation rate structures.
The reality is that where conservation has been costed in other jurisdictions, it consistently comes in below $40/MWh and, when other benefits to ratepayers are considered, below $25/MWh. This is WAY below the marginal cost of generation in Ontario, even for coal.
So, should we cut the “program” portion of the conservation effort? Yes, but only if its costs are greater than the costs of new or renewed generation. Agreed that we need to determine this cost as Tom is suggesting, but don’t be surprised if it comes in far below generation costs as is the case elsewhere.
The marginal cost of conservation that you are quoting appears to ignore the lost revenue incurred by the utility. If the utility is incurring a cost of $20/ MWh to get rid of load, but losing revenues of $100/MWh where marginal generation costs of $40/MWh, the utility is out $80 for every MWh conserved. This cost will have to be made up from non-participants. I don’t think I should pay for a conservation program you use.
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